How a Design Prototype Became an $800M Business Opportunity for Philips

26:18Sean Carney:There's always a dynamic. On the one hand, you have business units who are operationally responsible for delivering the profit, for delivering the revenue that you need to keep the company running right now. And they are performance managed. So they have monthly performance reviews, quarterly performance reviews, and they're always trying to balance there between investment in new products, looking at their margins, looking at how much they spend on marketing and cost of the bill of materials or the cost of the products and all those kind of things. And then you've also got the responsibility from an innovation portfolio perspective, looking ahead, looking at where will we be at the end of the life cycle of that particular product and what's coming next?

27:04Sean Carney:What are the customers looking for? What do we believe consumers of the future are going to need? Which is a difficult discussion when you've got a portfolio which not only caters towards end users like B2C customer profiles, but also a B2B environment where you've got large enterprise like hospital systems, making big investments in software platforms or capital goods like MRIs and CTs and x-rays. So a very diverse kind of portfolio that you're dealing with. But the responsibility of an innovation board is to make sure that you're investing for today to make sure that you've got revenue and you're balancing and managing the costs and the supply chain to satisfy today's markets, but then also looking to the future to make sure you're going to be fit and ready with the right products at the right time at the right price to satisfy those emerging needs as well.

28:01And was there any particular balance that was established in the company that we need to spend 80 % of time and money on the current and 20 % on

28:10Sean Carney:the future what was the that balance yeah there was sustaining innovation adjacencies and then new and future business i can't give exact numbers but it was more than 50 on sustaining but then around 30 on adjacencies and then 20 on new and future business as well new to the world products yeah makes sense and that would vary according to so all we had 30 something different business units all with their own pnl and so we would then have to take a top-down view which are the key product categories that we want to see maybe an extra bias towards breakthrough innovation they've under-invested in the past we now need them to over-invest to catch up or we believe there's more opportunity in adjacencies than new and future business.

29:04Sean Carney:So you have to have more detailed discussions at an innovation board level with the innovation leaders and the business leaders at each of those businesses. Love it. I love the structure overall. So going back to the case study, now that you identified the problem and potentially that the solution might be building this prototype, how do you go about calculating the budget for it? Who was in charge? Was it given to you? And you were like, do whatever you can in one year with this budget. Was it the other way around? You kind of had an idea where you wanted to go and you had to calculate how much money you will need to make it a reality.

29:38Sean Carney:Yeah, again, it's a discussion at the top level as well, because one of the things I was adamant about is I don't want to do design theater. So what I didn't want to do was a kind of smoke and mirrors show where I would put up a concept car that had nothing behind it, no substance. So I wanted to make sure that the underlying technologies were being worked on, were on the roadmap, and we had the capability to be able to deliver on this. So that meant teaming up with the head of Philips Research in this case, and then the innovation leaders from Philips Monitoring and some of the other business units to make sure they recognize the opportunity space.

30:20Sean Carney:Once we were aligned, then we could start to talk about the budget. Now, you never get everything you wish for and you never get the budget that you really dream of, but it was pretty generous. We had more than enough to deliver something of substance and something that was meaningful. But it was a split budget between a number of different departments and design was one of them. You already mentioned P &L a few times and obviously this involved a budget. Did you know at that point how to look at profit and loss statements or put together a budget? Was that something very natural to you? Or how did you learn that skill of understanding the numbers at that level?

31:01Sean Carney:You don't. You kind of learn it on the job. I mean, there are probably people on the call and I see one of them there, my old friend, Damien Mycroft from Coca-Cola, you know, who've done MBAs. So they know how to look at the balance sheet. They know how to hold their own against accountants and the finance team. I had to learn it through the school of hard knocks. You submit your annual budget, your operating costs, and you get pushback. You have to negotiate. You have to understand where to drive efficiencies, where productivity can help out. But you learn as you build a team to basically manage your own budget.

31:36Sean Carney:But then as you work as part of a leadership team in a business, you also hear new terms, new expressions, perhaps EBITDA or EBITDA A, earnings before income tax and whatever it is now. I've so long I've forgotten. But what is a margin? What is a gross margin? All the rest of it. So you start to pick up on those. And if you don't know, just ask. There are warm and friendly people, even in the finance department, who will take time and explain these things to you. So never be afraid to ask. This is also a bit of a watch out. As you join the leadership team, it can be a tendency to want to fit in.

32:16Sean Carney:I'm really guilty of this. I want to be liked. I want to be part of the gang. I want to be part of the team. And now it's a leadership team operating the highest level of the company. And I want to some degree conform. And you need to, to a point, but here's a real watch out for people. You're there because you're a good design leader. You're there because you bring a creative mindset and you think differently. So you can have empathy for the head of HR, the head of procurement, supply chain, finance, and all those other departments and you need to be empathetic to their needs and understand their needs and why they're making the decisions they're needing.

32:56Sean Carney:But you also need to have your own point of view and remain true to your capability, to your competence, and to find the balance there as well. And that's the trick is to try and walk that tightrope between being true to yourself and true to your team, because you're there to represent the function of design. And hopefully are also there to advocate for the user and to speak in terms which help other people understand why you're so bloody minded about this particular detail. But you also need to understand why people are pushing back. It's not because they're being obstructive and they don't like you.

33:35Sean Carney:It's often because they've got challenges in delivering that as well. So if you can find ways to empathize with them, understand what's stopping them embracing your beautiful, big, creative idea, then you'll get some support. But it is absolutely tricky. If you have an opportunity to work with a business school, to maybe do some part-time lecturing or some teaching at a business school, I would say go for it because you'll learn things. If the company is willing to sponsor you in doing an MBA, absolutely go and talk to them and get that input. Probably the right time to say that we as Future Learning Academy have MBAs specifically for design leaders.

34:16So if anyone is interested, we do have. I'm not going to bore everyone with the details. You can find it on the website, but we believe that design skills are not enough to be at the C-level and business skills very much will get you more influence and also just more fun collaborating with other departments. So it is so important. But going back to your case study, I still want more details about certain things because I feel like the devil is always in details. It all sounds very good when you kind of have this big brushstrokes of how things happen. And when we start trying it ourselves as design teams, as design leaders, we see so many obstacles on the way.

34:53So we'd love to hear a bit more about your story as well. And one part is about measuring the impact. So one thing is you have the budget, you have this vision, and let's say you even convince whoever the business team or the CEO that this is needed. Now you need to deliver on it. So first of all, were there any KPIs or KRs, goals, anything set for this experiment of the year that you need to hit to show that you're actually delivering the value? How did you track them? And what did you decide was important to track overall?

35:28Sean Carney:Yeah, I mean, obviously, as a leader of a total design function, And, you know, we had more than 800 designers at this time working out of 16 different studios around the world, working across hardware, software, services, and a whole bunch of things. But in this particular case with this kind of healthcare transformation project, so we built the concept car. We'd had all these customers cycle through and tell us how much they loved it. And then we'd have customers coming back and saying, when can I buy this? When can I build this? Can you help me as I envision my new facilities? We saw the business opportunity in that.

36:06Sean Carney:And so we made a couple of acquisitions. We bought a company in the US called Blue Jay Consulting, who were a specialist in emergency room consulting, helping US-based hospitals do turnarounds, reduce patient waiting times and reduce length of stay and things like that. in a hospital. So we got these great consultants with this great capability. We then made another acquisition called Hospital Integrated Planning Services, HIPS, which was a bunch of architects and interior designers who could do BIM modeling of buildings, of hospitals. It's a building information management system, so BIM models.

36:53Sean Carney:So we would build digital twins of the hospital. Then we would do integrated planning within the hospital to run virtual prototypes of throughput and show the value that we could create. And through that, we built a business proposition, I guess is what I'm getting to. We built a consulting offering where we could take our concept car and now offer it up as a complete end-to-end bespoke service in terms of designing, building, and planning your pediatric intensive care unit. And that really got us started. We also did projects in parallel with the radiology departments at some of the key hospitals in the US, and then started to look at how we would globalize this offering.

37:39Sean Carney:Now, as soon as we did that, we had a P &L. So we had to show that we were profitable on the consulting services. and this is in parallel to my day job as a chief design officer. So we're running this as a consulting offering. But the key there was that the CEO was a major sponsor and he understood from the beginning that we were never going to get rich just selling consulting services. But what was interesting from a Philips hardware perspective and services perspective was the opportunity we created. If we were designing and planning a hospital, it was easier for us to then sell in Philips equipment like MRIs and CTs.

38:19Sean Carney:In one of the very first projects we did just outside of New York in Hudson Valley, we designed a complete ambulatory care facility, including new radiology root wings and virtual ICUs, telemonitoring centers. We ended up signing a long-term strategic project worth$800 million US dollars over a 10-year period. Now, when the CEO saw that, he said, well, how much was your consulting revenue? And it was a couple of million. Now we have this$800 million long-term strategic project. I said, okay, go do more of those. Find me more of those LSPs, those long-term strategic partnerships, because that's where the value creation comes for the business.

39:06Sean Carney:So I ended up with targets from the CFO in excess of a billion US dollars in terms of equipment pull through. Not that I was selling a billion dollars worth of equipment, but I was enabling our businesses to get contracts to a value of a billion dollars. It took the pressure off, does design add value? Because we were adding value. We were adding significant value. But what it does do is put you at odds with the equipment sales teams. So you win on the one side and then you immediately run into resistance with the guys whose job it is to regularly sell equipment because they saw us as taking their commission.

39:46Sean Carney:So it was an unexpected consequence, but we kind of had to work through the politics and find our way through that. Yeah, that was a challenge I wasn't equipped for, but we got there in the end. And how did you resolve that tension? by showing them that the process by which we engaged with these big strategic B2B partners, the healthcare providers in this case, that we could codify that as a way of engaging as part of the sales process. So we brought design thinking into the sales process. And I had a whole dedicated team of strategic designers who were complete, excellent level design thinkers who could partner with a country sales organization, identify key LSP opportunities, and then build a playbook for them, how to engage with that long-term strategic partner, potential partner, and look at how we would then secure that deal and deliver on that deal.

40:50Sean Carney:So there was a whole branch of my strategic design team who were dedicated to following and tracking with the LSP partners. And I assume they would still get the commission from that process. But then the commission would go to the people in the market. So we were enablers in that case. We weren't trying to take any money out of their pocket. We were facilitating them to be better salespeople and teaching them how to listen more carefully about the user needs, how to understand the context, and applying basic design principles into how to engage with your customer and then helping show them how that would result in a bigger, better deal with those customers.

41:34There are so many interesting things in the example that you shared. So first is we talk about REI and design and the value design can bring. And it's always the best way to think about how you connect what you do to the revenue is to be as closely connected to revenue as possible. So thinking how you can increase the revenue as a design team, as a design capability, or as a designer, as a creative. And I feel like the example you're sharing is literally as closely linked to sales as possible because literally you were enabling sales. So I think if any designer ever questioned how they can influence more in the organization and how they connect their work with the impact, understanding how they can be as close to revenue as possible, how their work can be as close to revenue as possible is a great hack overall.

42:24What I also love about your story is that this example showcased so many different values that design bring. On one hand, design has this incredible capability to visualize some strategic things that otherwise might not be seen. So again, salespeople were, I'm sure, saying all the same things of how if this unit exists and if you buy all of this equipment, it will be so amazing for your hospital. but words and whatever PowerPoint decks sometimes is not enough sometimes is physically seeing the space and having the prototype and having the workshop and having this different way of explaining something that is intangible and making something that is intangible very tangible actually facilitates people understanding what you're trying to do well the other part of it was

43:12Sean Carney:you know as we build out this kind of consulting proposition we said wouldn't it be great if we have real-time data to be able to validate the insights that we're getting from talking to patients and talking to clinicians. So we built a system of real-time tracking location where we put sensors around, let's say, a radiology department, and then we could track movements. Now, remember, I'd also bought this hospital integrated planning team. So we had a virtual three-dimensional model, a digital twin of the department, now with embedded sensors in there, so we could track movements of patients, clinicians, and then we could run predictive models, predictive algorithms to say, well, what happens if that MRI goes down for service?

44:00Sean Carney:How am I going to distribute the load across the remaining devices? Or if I were to add another room with another MRI or another CT, how much more throughput could I get? And then if we put a cost per patient, cost per study, cost per intervention across that, how much more revenue would that generate for the hospital? So you start to be able to model different outcomes based on data. And it's data that you've accumulated from their hospital. And with the predictive algorithms, You can actually model all of this as well. So that meant as a design function, we had to build a capability around using data as a creative asset, as a creative tool.

44:44Sean Carney:So that was another investment in building design capability for a future need. Now, whilst we were building that for the hospital planning and hospital integrated services, we were also leveraging it on, let's say, more regular products like toothbrushes, powered toothbrushes. So, you know, we also had a huge business, powered toothbrushes with the Sonicare brand. And we felt there was an opportunity if we could connect those toothbrushes and start to collect data from them. Now, initially, the business was resistant because, you know, you're putting extra cost into the bill of materials, whether it's, you know, for the connectivity.

45:22Sean Carney:And then you've got to build an app. You've got to maintain that app, which is going to cost further money. And it's seen as dilutive to the margin. So it's actually going to be an overhead on top of the current business. So we had to demonstrate the value we could capture from having data coming from those brush handles. And we did that by saying, well, what if we were to partner with, let's say, an insurance provider, an oral health care insurance provider? We could now provide insights into how frequently people are brushing their teeth. we could actually provide coaching to those people based on their brushing behavior to improve their oral health and the insurance provider could also perhaps lower their premiums if there's evidence that they are brushing in a correct way we could also link that data back to the dentist and the hygienist in order to give them further coaching and insights into improving their oral health So yes, there was initial cost on the bill of materials, but the extra value to the patient, to the user in this case, was something that we could clearly demonstrate so we could more than recover the cost of that extra bill of materials.

46:36Sean Carney:And that also then created other opportunities because we connected the brush head also into the system with this tiny little sensor in there, an RFID chip, which meant we could also identify when we got a proper Philips brush head on there. And we could also tell the user when that brush head was nearing end of life and needed to be replaced. So some of the lessons I'd learned at HP around ink cartridges and printers, for instance, you know, the ink cartridge contains a fluid which is even more precious than Chanel No. 5 perfume. and that's where all the revenue of course comes from from the printing division in companies like HP.

47:19Sean Carney:So they are vested in making sure that you spill more ink and that you buy original HP ink when you buy a new cartridge. Well equally I could apply the same thinking when it came to the brush head that we want you to buy an original brush head and that in order to maintain the best outcome, the best oral hygiene, that you replace that brush head at the right moment. That gave you an opportunity to increase the recurring revenue, to close the loop in the system and keep people in the franchise of your brush heads, brush handle, and the insurance services as well. So it created a new business model opportunity.

48:00Sean Carney:And again, so we've got new emerging capabilities around design, around designing with data. What can I do with it? But that led to, do we have the right skill set and people to think about new business models and how to innovate in business modeling? And that was where, again, the sort of the MBA school of thinking together with strategic designers came together to do business model innovation, business model canvases that would think differently about opportunity spaces. What I'm hearing, business and design coming together is some incredible superpower that can drive companies forward. Would love to also hear a little bit more about the process of all these things happening, because you just mentioned few projects, again, kind of were discovered by design team.

48:51And it seems like a very multidisciplinary team as well. Designers, engineers, people who understand different parts of the process. And I can imagine creatives and designers have millions of these ideas a day. And as a designer, I feel like this is our nature to see problems and investigate what's wrong and how it can be better. So anyone working in the company can spot so many things that potentially can be improved or have an opportunity behind it. So first of all, how did you select which ones to pursue? how often did you go and actually build a business case around them, like you described with the toothbrush, where it was very much well thought through, kind of how it links, what kind of revenue you can bring and all of this.

49:34And who and how do you present it to? Let's say you did understand that this toothbrush case is a thing. Who do you go to with this?

49:42Sean Carney:Well, in that case, the primary owner is the business leader for that particular division. And that was a substantial size business, a couple of billion dollars turnover, not a small business by any means. He was looking for new growth opportunities and looking at how he would grow his business because he's got targets coming from corporate, coming from group around how much he's expected to grow his business every year. Now, on the one hand, he could look for new geographies and spread his product globally because there were plenty of markets where he wasn't present. There are plenty of countries where people are still using manual toothbrushes and not powered toothbrushes.

50:24Sean Carney:So you could look at conversion there to get people onto the powered toothbrush, the Sonicare franchise. But then in the mature market where he's already got his number one in the market, he's already got good penetration like the US, for instance. He needed to find new sources of revenue. So this was a great way to open up new possibilities. So when we talk about the innovation portfolio, this was seen as an adjacency. So we took the existing product, added capability to it, and then looked at adjacent business models. So on the one hand, increasing the recurring revenue stream by making sure that we got more brush head sales.

51:04Sean Carney:On the other hand, opening up new business models with insurance providers and oral hygienists and dental providers to make sure that we were not only being specified by those people as the best choice of power toothbrush, but also for them to be able to capture value for their patients and improve the overall health outcomes for those patients. and how did you calculate all these potential revenue numbers and how did you present them and also did you have a kind of a minimum number when you started calculating it you mentioned a few billions like did you know that in a company anything that less than a billion I shouldn't be bothered with it's not an opportunity was there any kind of level that you knew you needed to hit in terms of tam sam somo any fancy terms of business that yeah as with any you know I mean Philips is a great innovation company, as many other companies are, but they had a culture of innovation, of experimentation, and have launched many great new-to-the-world products.

52:08Sean Carney:These were the guys who invented the CD, the first connected light bulb, the compact cassette, if you remember that one, Blu-ray, all of these kind of innovations that have gone on to be huge and very successful. There was a joke that we had more pilots running at any given time than KLM had flying airplanes. So that was kind of in the culture, in the nature to try things. But there was always kind of an urgency to this. So what's the time not just to launch, but to scale? And to scale meant how quickly can we reach 100 million euros turnover? Now, in products like the Air Fryer, when we brought the Air Fryer to market back in like 2011, 2012, that was an unknown product, unknown product category.

52:53Sean Carney:but it scales so quickly. And that was reaching hundreds of millions of dollars very, very quickly. But not all products do that. And knowing when to pull the plug, when to walk away, when to kill your favorite is difficult. But again, design is only a part of the puzzle. You do this together in an integrated manner with lots of other people, with design, with strategists, with marketeers, of course, supply chain logistics. you need a lot of people coming together to get this kind of work done. I love that you mentioned failures because that's what I wanted to learn more about from you as well, because not every experiment goes well.

53:34And we talk a lot about the value of design, of measuring the impact and ROI, and having these goals and predictions. But what if you do have all these predictions and then it doesn't go well? So how do you deal with something that you actually thought could bring some value to the business, but it doesn't.

53:52Sean Carney:Yeah, it's really uncomfortable. We had some seemingly brilliant ideas, what we thought were real game changers that when they hit the market just didn't fly. And it could be any number of things. The execution wasn't perfect or we didn't anticipate the market in the correct way. We underpriced it. There are a number of different factors. But I think the key thing is when you launch, make sure that you're kind of watching and learning. Now in the world of digital, of course, that's a lot easier. You kind of launch your minimum lovable product, you get that out there, and then you prepare to iterate very quickly.

54:33Sean Carney:So capture learnings, improve it, and then go again and keep iterating. When it's a piece of physical hardware, when it's a piece of capital goods, that's really, really tough. Now put that into a medical situation. And you can't really launch an MLP, an MVP, because somebody's going to get hurt. Somebody's going to get damaged by this. So you have to do your due diligence up front. So obviously, the degree of risk varies according to the market that you're operating in. So if you're coming into an MRI or radiology department, you're unlikely to be launching anything that isn't already well proven before you come to market.

55:13Sean Carney:If it's a digital solution in the consumer space, you can afford to maybe go a little bit riskier there. But once you enter into the world of healthcare, then it's all about mitigating risk, validating that this isn't going to cause harm, that nobody will be injured as a result of what you're doing. So, of course, you've got to be a lot more careful. I can only imagine how difficult it is to design in a healthcare space where you're right. On one hand, you need innovation and you constantly need to innovate and push the industry forward. On another hand, as with any innovation, there are so many uncertainties and unpredictable things that navigating that must be incredibly hard.

55:53I would like to pick an easy example. And let's say it is not healthcare, but something you do launch to the market. You mentioned this 100 million mark that was a baseline to hit as soon as possible. Like, is it within the year when you mentioned you need to decide when to pull the plug? And also, how after a failure do you go again to whether it's a leadership team, business unit and say, you know what, I have another great idea how to make 100 million?

56:19Sean Carney:Yeah, I mean, one that kind of stung early on was, you know, I spent an early part of my career at Electrolux and designing everything from vacuum cleaners to refrigerators and so on. So I was quite excited to land at Philips and get back into the world of vacuum cleaners, for instance. And we had this opportunity space, an opportunity brief around there are going to be more and more hard floors, the kind of IKEA type floors. tiled floors. People in the south of Europe tend to have tiled floors and they mop their floors regularly. So they don't need a vacuum cleaner. They need more of a electric mop type situation.

57:01Sean Carney:So we created something that was a hybrid between a mop and a vacuum cleaner. It was called the Aqua Trio. And we were totally in love with this thing. It was super smart. It had rollers spinning. It had foam coming down and cleaning your tiles. It sucked up the dirty water and all the rest of it. It was perfect. The problem was that it just didn't work. So we had a beautiful design. We were winning design awards with it. But we launched it into the market. And we immediately, immediately started getting complaints and like two-star reviews, one-star reviews. But you know what? The business was so in love with it.

57:39Sean Carney:And we were so in love with it. We just kept pushing this bloody thing out. and it was only the intervention of the CEO of the consumer business who said, you know what, we are eroding the brand. We're damaging the brand, continuing to let products out into the market with a one or two star review. So he asked for my support at that point and we did a quality day. And quality in many people's mindset is where a product breaks, a product fails. something goes wrong with the product and you have to return it or you have to get a spare part and so on but product is also in terms of it didn't the needs that you led me to believe it would satisfy so we told people this thing will mop your floors in a clean and efficient way better than anything you've ever seen before and it just basically didn't do that and so we were getting these negative reviews so we had a big deep dive a whole day where all the businesses came together and we talked about actual quality and perceived quality and the damage this can do to your reputation and to your brand.

58:46Sean Carney:And I brought in speakers. I brought in some friends from BMW, for instance, to talk about brand and why quality matters and every touch point matters. So whether it's the service people, the interior of your car, the exterior of your car, the engine, the way you service it, all of those things. So those guys were great. They really helped me get the message across. We pulled that product from the market six months after launch, recovered all the stock and basically stopped the business. Now, about 10 years later, the business has spun out of Philips. It's now a company called Vassuni and does all the Philips domestic appliances.

59:26Sean Carney:They've just launched a very similar product, but this time they've engineered it in a way that it does work. So I'm interested to see how quickly that product scales in the market and if it will reach that 100 million threshold as quickly as it needs to. Such a wonderful story. When you were telling it, I could see how much passion and love you put into this product with all these lovely elements. And it is very hard to admit sometimes that what we imagine could be a great thing actually doesn't work so I mean that's the thing with designers we fall in love with our concepts we fall in love with our products and for other people it seems really strange that you could talk so passionately about a steam iron or something like that but we do we really do we care deeply about these kind of products and I think that's beautiful I think this is one of the rare professions where we actually enjoy what we do day to day and can actually make a difference in life so i think it's a good thing and especially when you can be passionate about so many different types of design not just kind of one type of product but literally everything you create is essentially your your baby your creation so you can make it as beautiful as useful as as anything as you want so i think this is very very powerful to wrap up on the conversation about rei and all the numbers it sounds like at phillips and other companies or most of the companies that you worked at, there was this culture of believing in design and believing in experimentation, believing that innovation and design as part of the innovation can bring extra value, which is incredibly powerful and empowering for design teams, but unfortunately not the case for all companies.

1:01:13So do you have any advice for someone who potentially is working in an organization where it's not as easy to get an experiment or to say that we should do this prototype or use the research and try to figure out how to solve this problem in a bigger way than very direct way we are looking at right now. And we do need time for it and we do need budget for it. How would you go about it and how would you report back on any successes or failures from it?

1:01:40Sean Carney:Yeah, I mean, not all the companies I've worked for have had design kind of on the pedestal in the way Philips did to a degree. But, you know, I mean, if I go back to HP, when I landed at HP, I was told we think design is important to us, but we've got this kind of gang up in the north of California who do some concept work. We think we've got some designers down here in San Diego, where I was based, who are part of the engineering team and they do some good work. But we kind of keep being told that designers could be offering more value here. So my first three months at HP were really becoming a forensic accountant to dig deep into the books, into the investment and find out how much money was being spent on design and by who, and then work with the HR teams to identify who were the designers in the global organization.

1:02:38Sean Carney:and we went from a team of 25 to about 150 in the space of just a few months and we very quickly created a community of practice where we would sort of say hey we're building this design capability do you want to be a part of it and start to pull people in towards us and then start to have these kind of tough discussions with the business leaders and the r &d leaders the engineering leaders because HP was very much an engineering-led company, which was great. Some of the best engineers I've worked with were at HP. They were fantastic to work with, but they owned the budgets, not marketing, not design.

1:03:17Sean Carney:So you had to have these tough discussions about how I can help you get more for the dollars that you're investing in design by putting it together as part of a strategic roadmap, a strategic plan, and understanding where you're investing in new platforms. And we can look at how we can get the maximum value out of those platforms by creating the right product categories, the right product range for the customers that you're servicing. Now, that was quite a journey to get that conversion. But we did get there in the end, but only by showing the value that we created. Now, along the way, I have a Steve Jobs story here because Steve Jobs actually helped me on that journey inadvertently.

1:04:03Sean Carney:About eight, nine months in, 2008, Jobs had called Mark Hurd, the CEO of HP at the time, and said he was really disillusioned with the printer experience. Now, remember, printing was a 30 billion plus business unit within HP and that he was going to discontinue printing as an option in the next release of the operating system. Now, this was quite a threat, and this really put a scare amongst the senior executives because this was worth upwards of$10 billion a year in ink sales because guess what? Apple users print more than regular MS users, and they tend to print a lot of colored documents, large format documents, and things like that.

1:04:52Sean Carney:So to think that Apple wouldn't be supporting printing scared the hell out of everybody. So a group of us then were invited up to Capitino to sit with Jobs and his team while he told us how much we sucked and that the experience was just awful and not worthy of being in the Apple ecosystem. And the CEO said, well, how do we fix this? And he said, listen to these guys, listen to him, listen to your designers. They understand the experience. They know what you should be doing. We were tasked then with putting a skunk team together to create a new to the world product. So a product that would be worthy of going into an Apple store with the right fit, feel, finish and materials on it.

1:05:36Sean Carney:But more importantly, to find ways in which you could get a seamless experience between your design on an Apple Mac and the printer. So basically get rid of the clunky print drivers that we'd had. Anyway, the long story short, what came out of that was AirPrint. So if there was any HP device sitting on your network, your Apple Mac would find that printer and would print without any print driver downloads straight to that device. We translated that into the iPhone, into the iOS as well. So again, if you find a HP printer on your network, you can print your screen directly to that printer. So we took the new printer.

1:06:18Sean Carney:It was a HP Envy for the nerds amongst you. We copied without any shame the material feel and finish of the Mac PowerBook, put real glass rather than plastic. Interaction design was also using the HP carousel design that we took from Palm. And then we gave it to Jobs and we said, well, please try it and give us the feedback. Anyway, he liked it. He adopted it. And print stayed in the operating system. So we saved design and the experience, saved HP billions and billions of potential lost revenue. So it was a great year for design. My bonus was very good that year. I was really happy with that.

1:06:59Sean Carney:And I'm really happy that you still find print on the Apple operating system today. Wow, the true power of design can transform any company. Brilliant, brilliant story. You already mentioned that a big part of it is obviously understanding the business and becoming more literate within the business terms so you can collaborate with other people. But on the other hand, not losing that thing, which is creativity and design and imagination and everything you actually do bring to the table. How do you cultivate that within yourself, not to lose the sight of creativity? And how do you bring it physically to the boardroom?

1:07:40What does it mean to actually show design in this pure form to the rest of the organization?

1:07:46Sean Carney:So I think, you know, often what I found at board level meetings, at C-suite level meetings, they're focused on the spreadsheets, on the PowerPoints, on the numbers. And getting a physical product or getting your even digital product in front of them, letting them actually see it, get them to use it, get them to experience it, Give them hands-on onto these products. If it's a room, walk them into the room so they can actually feel the ambience of the room itself. But it's really important you get them to experience that product. And if you do that, then there's a pretty good chance you're going to start to get a conversation going with them, and they'll get excited about the product.

1:08:29Sean Carney:You know, when I first landed at Philips headquarters in 2011, as it was, it was a drab and dreary place. I come from HP in California. It was an engineering culture. We had prototypes all over the place. I mean, it was pretty horrible, to be honest. It was all traditional Silicon Valley style cubicles, cubicle forests everywhere. But behind every cubicle, there were people building stuff and prototyping. And we did this thing called management by walking around once a week where the C-suite would come and walk through the cubicle farm and just ask people, what are you working on? Show me your prototype.

1:09:08Sean Carney:So people had prototypes and pet projects on the side that they're encouraged to do and show people. That was where some of the breakthrough innovations also came from. But arrived in Phillips and the corporate headquarters, they could have been an insurance company or a bank. There was no sign of a product anywhere. So I immediately found within our design team, we started to put displays on. We got the products, the prototypes out, the ones which were already launched, the models that we built, and started to put them in the common areas so people could actually see what it was we were working on.

1:09:46Sean Carney:And you've got to find the balance there, because obviously you don't want to give away trade secrets, you don't want IP leakage, so you've got to find the right balance. But having posters, having prototypes, types demonstrating the value that you're creating is really important there as well. Brilliant. And we have a few more questions that were submitted based on this. How do you lead in design when it seems so many companies still don't understand it? And I think going back to your story of transformation, how do you start this conversation if you don't have Steve Jobs who will save your entire company?

1:10:22Sean Carney:You know, we'd all love them to be visionary leaders like Steve jobs. And unfortunately, there aren't that many around. So it's up to us. And I think it starts with empathy. Empathy, of course, for the users, for the people who are going to be buying your services, your products. But then also empathy for the business leaders, because they have customers, they have bosses too. They have shareholders, they have boards that they're answerable to. So how can you make them look good? How can you show that they are also creating value? So understand what's going to get their attention and talk to them.

1:11:00Sean Carney:Ask them what their biggest issues are, their biggest challenges. And some of them will undoubtedly be short term. They will have quarterly performance coming up. They will have shareholder meetings coming up, whatever it is. But look at how you can add value to their needs. Brilliant. We have a question. How do you get funding or budget to make a prototype to sell the idea? shareholders want to see working prototypes before they buy in, these prototypes can be quite costly. They can, but this is why it's good to be completely transparent about what is the true cost of product development and make sure that you secure budgets for initial prototyping as well.

1:11:42Sean Carney:And this is where you need to team up perhaps with your R &D leader or your CTO or your head the marketing CMO to get their support in securing the budget as well. Now, within my own budgets, well, at HP, at Electrolux, at Philips, I also was good at trying to drive efficiencies and productivity where I could, and then creating savings, creating a pool of savings, and then looking strategically about how I might reinvest that into other areas. So, for instance, as we identified the need for data-enabled design, we upfront couldn't secure a budget to fund that activity, that probe. So we had to drive savings and efficiency elsewhere in the organization to free that money up.

1:12:35Sean Carney:And then you do a bit of clever kind of tricks to make sure that it doesn't get immediately taken off you and put into the CFO to buoy up this quarter's bottom line. That's a bit of a trick as well. But that's why you need to talk to the CFO, talk to your finance team and make sure they understand that you're not just going to squander this. You're not going to pay for a jolly for the team or free donuts on a Thursday for them. But this is actually going to go to building some meaningful capability for the future as well. This is such a brilliant example. I feel like it almost relates to our own human way of thinking about things like how do you budget for anything?

1:13:14You save a little bit on the side and then you reinvest in something else and approaching the same way the design and leadership, I think.

1:13:22Sean Carney:But I think, you know, I don't want to sort of dismiss this out of hand because I know it's top of mind for a lot of people like now. The big four consultants who were all about design five years ago, going out and buying design agencies left, right and center, building their in-house design teams, whether it's McKinsey, BCG, all of them were at it. And guess what? They've all got rid of them. So they've all laid them off. But in the process of building it, they were also out there busy telling large corporates, hey, you don't need such a big internal design corporation. Actually, we can help you.

1:13:58Sean Carney:Now, what they found along the way, that was that design as a service was dilutive to their margins because you can't charge a junior a designer building a new website or app at the same rate you can an MBA graduate advising on the strategy of a business. So it became dilutive to their margins. That's why they've also offloaded all of their design capability. So now we're left with a design business or design capability across the functions, which is severely wounded by some of the work that these guys did. They're Not my favorite people, you probably guessed by now. And I have some good friends in there as well.

1:14:38Sean Carney:But they created this kind of problem, this rod for our back. And now we've got to kind of find a way forwards. Now, the other thing they were advocating for was move design into the businesses, which is why the role of a CDO has disappeared. You know, many CDOs have been let go. There are more coming. I know a lot of people, former peers, are also on the edge and maybe some more disappearing in the coming weeks because it was the big four advocating for moving design into an operating level. So you have designers moving from central teams now into business units, often reporting in a much lower level to an R &D manager, a product manager, or a marketing manager, which is not great for the capability.

1:15:25Sean Carney:But there's light at the end of the tunnel. I'm now getting calls from large businesses, large enterprises, who are saying, we did all of that, but two years on, we're now seeing that our brand is fragmenting. Our customer experience is no longer connected. We're starting to see disjointed innovation roadmaps. We really miss having somebody connecting the dots across the function. So now we're starting to see also new design leadership roles emerging. Now, it won't be the same. It'll be a new reality. But I do see some glimmer of hope, some light at the end of the tunnel for an integrated approach to gather up all the disparate experiences that are starting to be built and for somebody to advocate for design quality and to advocate for design experience across the organization.

1:16:19Because, you know, sorry,

1:16:20Sean Carney:but the head of marketing, the head of R &D, the head of supply chain, they're not going to do that. You need somebody who understands the nuances of delivering great design that will elevate that and fight for that as well. I so agree with you, Sean. And we actually see the same trend across the industry of this new emerging type of chief design officers that are more integrated. and as you said it creativity and design overall is about connecting the dots so it makes sense that someone at sea level who connects the dots within the organization will be incredibly powerful especially with all the technology and tools that are now available where each individual skill is not as valuable as actually connecting multiple departments multiple visions multiple things that are happening on one hand from a very kind of day-to-day level but also from a human level because designers bring empathy and understanding how we can collaborate with different departments, how different departments can collaborate with each other, and how we all together can facilitate this growth.

1:17:28I think creatives and designers have this very unique skill that we've been trained on and now can be applied on a more strategic level. So design stops being about just designing and the kind of the traditional way the design has been seen. And it's more seen as a big capability that is more strategic and can create new opportunities for the business, can connect different parts of the business, can bring new ideas. and also sustainability and inclusivity and ethics and everything else that businesses are missing because no one looks after that capability at all.

1:18:07Sean Carney:That's the beauty. It's one of the softest skills you learn as a design leader is, you know, designers are bloody hard people to work with. You know, the best designers are creative. They go the wrong way. They think divergently. They don't want to conform. They will challenge. and that's the skill of a design leader is to kind of get your arms around that and guide and nurture and direct as gently as possible nurturing those great brilliant ideas whilst making sure that to deliver value at the end of the day and again this is where the management consultants coming in I've said well look we love design thinking because that codified some of this kind of fluffy messy thinking that goes on.

1:18:53Sean Carney:It's a way of creating some tram lines for us to follow. And this sort of double diamond approach allows us to at least plot the flow of an idea of an innovation process. So design thinking kind of started to bite us back in a way. But now I've also seen a lot of people advocating for design systems, design systems at scale. I've been there. I've done that. I built the design language system at Philips seven, eight years ago. We built codified assets and components that would allow us across all of our software product development to pick and play, to drive uniformity of experience, to improve productivity and drive efficiency.

1:19:36Sean Carney:But the downside of that is it also, you become lazy. You can plug and play. And then why do I need design? because actually now I've got a component library that's already built and now I can literally assemble Lego block style any number of different interfaces. Now, is that really what the user wants? Is it right in every context? Where's the quality? Where's the love? Where's the desirability? That's becoming an issue. And so I think what we'll get is more, if we don't find a way of navigating this design systems discussion, will end up with very me too, mundane, functional, yes, but engaging, no, software and systems.

1:20:22Sean Carney:So I think that's a real watch out for all of us. Don't fall in love with your design system. Make sure it's there. Make sure it's robust, but continuously challenge it. Continuously advocate for the user and think about how to create that lovable, engaging experience because that's what will create value in the future. 100 % agree with you, Sean. I do believe that I think creativity overall in design, design thinking, noise and methodology by design way of thinking adds so much value beyond just systems and beyond kind of thinking in a very linear way. And we should not forget as creatives and designers, that's what we bring.

1:21:03We bring imagination. We bring disruption. We bring innovation. And this is needed more than ever. I think, in the industry that we work now. And also industry knows that it's needed because everyone is tired of the same. Everyone is competing on the same kind of playing field. So if we can elevate things through this power that we have, I think it's a win-win for everyone. Sean, I have one last question left for you before we let you go, even though I would love to have another hour. But we'll have to wrap up. And my last question is something that we ask everyone who comes on the podcast. It's a bit more philosophical.

1:21:42If you could change one thing in the world, what would it be?

1:21:48Sean Carney:You know, one of the things I've done since leaving Philips is I was a founder and trustee of Design for Good. And have a look at it, designforgood.com, if you're not familiar with it. But we work on the UN Sustainable Development Goals to make sure that we're bringing the power of design, the capabilities that we have within design to truly impact the lives of people and to improve the quality of life for people. We work on SDGs, the Sustainable Development Goals. We first of all worked on water and sanitation. We're currently working on education. And this isn't about design theater. Again, this is about having real world impact and truly improving the quality of life for people on the ground.

1:22:33Sean Carney:I think when design is done well and we see it through and we execute it properly, then it can truly improve the quality of life for everybody. Now, UN SDGs are specifically targeted about those in most urgent need. But I think this can be for an approach we take for everybody. You know, we need more joy. With all the crap that's going on in the world, with the social unrest, the geopolitical moves that are happening as we speak, tariffs, etc., we need to bring some joy back into the world. And I think we can do that in a meaningful way and in a way that creates value for humanity and doesn't destroy the planet in the process either.

1:23:17Sean Carney:So that's what I hope for. I'm trying to do my little bit through Design for Good and some of the other initiatives I'm working on. but I hope everybody will join in as well. Wow, I love this sunset. Definitely more joy, more design, more imagination, more greatness and goodness in this world. This is what we need. Thank you so, so much, Sean, for sharing this time with us and your wisdom and your perspective. I absolutely love how you combine thinking about the future and thinking about the present, the business side and the creative and craft side and structure versus creativity. This is so brilliant to hear how you not just have it in you as a human, but also managed to implement this in so many companies and show the real value of design and prove that it is possible.

1:24:09And it's so inspiring to hear your stories because I feel like we need more of them in our design community to know it's possible, it can be done so we can all move the industry forward. So thank you so much for today.

1:24:21Sean Carney:Thank you. Thanks again, everyone, for joining. And thank you, Sean, so, so much for sharing everything with us. It was such a pleasure. And until next time. Bye.